Clive Mathieson | October 11, 2008 THIS time last year, few people outside the US had heard the phrase "sub-prime". Now, to the great misfortune of hundreds of millions of investors, homeowners and workers, it is known globally. What began as an issue among over-stretched US homeowners has morphed into the greatest financial crisis the US, and the world, has faced since the 1930s. In the US, home loans that Australians would describe as "low-doc" (those made to borrowers with poor or non-existent credit histories) are known as "sub-prime". In the era of easy credit, fuelled by record low interest rates in the US, these loans were made available to millions of households that could not afford the repayments. Lenders bundled up these loans into products called, among other things, "collateralised debt obligations" and...
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